If you are a global investor, you need to pay attention to China’s tech companies. In my previous article, I talked about the Hong Kong IPO fever this year and highlighted the Ant IPO. The IPO prices for both Shanghai and Hong Kong legs are finally set. If you are interested in Ant IPO, here is what you need to know.

What is Ant Group IPO

Ant Group, formerly known as Ant Financial and Alipay, is an affiliate company of the Chinese Alibaba Group. Ant Group is the world’s most valuable unicorn company (a privately held startup company valued at over $1 billion).

Ant’s mobile payment app Alipay has 731 million users on September 30. To put the number into perspective, PayPal, the world’s largest payments platform outside China has only 286 million active users.

Ant IPO was supposed to launch early this month but the process was not smooth after Trump announced a restriction on Ant Group.

Nevertheless, the interest in Ant IPO is super strong and Ant Group has decided that they don’t even need cornerstone investors. It was also reported that our dear GIC has planned to invest more than US$1b in Ant IPO.

Ant IPO will be simultaneously listed in the Hong Kong stock exchange and Shanghai’s Nasdaq-styled Star Market. The Shanghai IPO pricing was determined last Friday. But for most foreigners, you can only subscribe to the Hong Kong leg.

Additional Reading: Why should a foreigner invest in China.

Subscription details of Ant IPO

Finally, Ant IPO priced its Hong Kong leg of stock offering at HK$80 per share today. I will summarize some of the key information here:

  • Ant Group has chosen a very lucky number 6688 as its stock code (Fun fact: Alibaba’s Hong Kong stock code is 9988).
  • The IPO is anticipated to debut on November 5, after the US election on November 3. This could be in consideration of the impact of the US election on the company.
  • Ant’s IPO values it at US$313 billion, rising to US$318.50 billion when an overallotment option is included.
  • Book building and collecting pledges has started.
  • Hong Kong public offer is 41,768,000 H shares, about 2.5% of the available H shares
  • If the Hong Kong offer is oversubscribed 20 times or more (highly likely), then the Hong Kong retail offering will rise to 10%.

Please note this article is for information sharing purposes and does not constitute any financial advice or recommendation.

The book-building (gathering interest and pledging) started on Tuesday. There are three tranches to get Ant shares:

  • Private placement – for high net worth individuals via select brokers only, high chance to get allocated. You only need to pledge asset.
  • Public offering – ballot with everybody else, very slim chance to get allocated. You have to have HKD ready in your investment account.
  • Buy directly via Pre-IPO trading or the stock market.

You may need to declare as an Accredited Investor or subscribe at least $200K as this is a Hong Kong IPO. You don’t need to be physically in Hong Kong or mainland China to apply for this IPO. Singaporeans can apply too!

Please check your own stockbroker or financial adviser for the procedures. Different brokers may be eligible for different tranches.

You can download the Ant IPO prospectus via this link. You need to subscribe to a minimum of 50 Hong Kong Offer Shares and in one of the numbers set out in the table below. You are required to pay the amount next to the number you select.

Based on this table, if you are not an Accredited Investor, you need to subscribe to a minimum of 20,000 shares (HKD 1,616,123), which is about S$283,600.

Criticism of Ant IPO

There is a Chinese idiom saying “a tall tree attracts the wind” (树大招风). Ant has faced scrutiny in recent days after Jack Ma criticized local and global regulators for stifling innovation and not paying sufficient heed to development and opportunities for the young. At a Shanghai conference, 2020 Bund Summit, late last month, he compared the Basel Accords, which set out capital requirements for banks, to a club for the elderly.

Personally, I agree with most of what he said. But he is moving many people’s cheese and it is a dangerous game. Watch the full speech below.

Update Nov 3, 2020 – Ant IPO was supposed to debut on Nov 5 (Thursday), but it is reported that China put the brakes on Ant Group IPO in both Shanghai and Hong Kong.

Update Nov 4, 2020 – Ant Group has announced to refund IPO application monies:

The refund of the application monies for the Hong Kong Public Offering (including brokerage of 1.0%, SFC transaction levy of 0.0027% and Hong Kong Stock Exchange trading fee of 0.005%) will be made without interest in two batches:

Read the announcement here.

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About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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